1.1 - Enterprise and entrepreneurship Flashcards Preview

Why do new business ideas come about?

New business ideas usually arise because of changes in society and consumer trends. These changes include:Advances in technologyChanges in what consumers wantProducts and services becoming obsolete

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Changes in technologyWhat do they mean for businesses?

Technology is constantly developing and can have a huge impact on what consumers want and needTechnology means that businesses have to be flexible and must innovate in order to respond to continuous change

How can technology provide business opportunities?

Making expensive technology affordableHow can they be used in a company's products and services?

Changes in technology can trigger new technologies to be made. In turn, previous technologies become cheaper to use and produceAs a result, they can be used more affordably in a company’s products and servicesE.g. 3D printing

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What are e-commerce, and what does it allow for businesses?

E-commerce means that a small business can operate with customers all across the world. It allows businesses to create to take online payments without having to create their own payment platformsIt also means that entrepreneurs don’t have to rent physical premises before they can begin trading.

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What is m-commerce, and what has it helped to do?

M-commerce means that people use mobile devices to buy and sell productsIt has helped to develop and generate new business ideas

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Social media and its impact on businessesHow can it promote businesses easily?

It has transformed relationships with businessesIt is a relatively inexpensive way to promote businesses and encourage customers to recommend their business to others

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What are the ways in which products and services become obsolete? (2)

Technology is a way in which products can become obsolete. It means that older technologies are replaced, and this can create new business ideasA product can also become obsolete due to changes in fashion and taste

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How do new business ideas come about?

New business ideas may come about throughAdapting an existing productOriginal ideas

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Adapting existing products/services/ideasWhat is the risk involved in this?

Adaptation is the process of modifying an existing product/service so it is suitable for different customers or marketsThis can be less risky than launching a brand new product

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How can a product be adapted? (4)

A product can be adapted through:Modifying a product to different customers and culturesAdapting the promotion strategyChanging a product’s brand nameResponding to new fashions

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How do businesses decide whether to adapt?

Businesses have to balance customer and market needs with the cost of development and the likely return they will get for investment in the adaptation process

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Original ideas - problems for entrepreneurs

It can be very challenging for an entrepreneur to come up with a completely new business idea. They may be successful

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Risks on business activity for an entrepreneur

Being an entrepreneur involves risks. When an entrepreneur launches a new business, they risk losing the money they have invested in the start-up of that business.

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Rewards on business activity for a business

If a business succeeds, they will receive a financial reward for that risk

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How can risks be minimised?

Risks can be minimised by being informed by plenty of evidence, such as market research and revenue forecasts

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Business failure - What can happen if there are problems with cash flow?

Businesses can have a problem with its cash flow, which means a successful business can have serious financial problems if customers are slow in paying their bills

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Business failure - What can happen in sales revenue?

This can happen if a business has failed to do something, such as running out of raw materials, or other reasons:

RecessionBehaviour of suppliersCompetition

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Financial loss - what can happen to an entrepreneur?

An entrepreneur can lose the money they’ve invested in their start-up, but this may also damage their reputation and could have an impact on being able to raise finance for other start-ups

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Financial loss - competitive risk

the risk that a business’s competitor might do better than the business

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Financial loss - technical risk

The risk that a product or service might not work as intended

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Financial loss - financial risk

The risk that a business doesn’t have the right amount of investment

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Lack of security - what can it cause?

An entrepreneur doesn’t have the security of working for someone else when they launch a businessThis can cause financial insecurity if the entrepreneur uses their own money to launch the businessLack of security can also have an impact on the entrepreneurs health

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Business success - what are entrepreneurs motivated by?

Many entrepreneurs are motivated by the satisfaction of building a business from nothing or thinking of something no-one has thought beforeSome like giving people jobs, and others like giving customer satisfactionMany entrepreneurs value receiving industry awards

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Profit - is setting up a business the route to success?

Entrepreneurs set up a business with the intention of making a profit, but it is rarely a route to financial successMany entrepreneurs have many set-backs, and have to work hard in order to succeed

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Independence

Many entrepreneurs are motivated by having the opportunity of working for themselves rather than for someone else. They often like to make their own decisions and hence like this option.

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What is business enterprise?

Business enterprise is the entrepreneurial activity undertaken by entrepreneurs and businesses, either by setting up or expanding a business

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What are the opinions for the role of business enterprise?

Some people think the main aim of business is to make as much money as possible. Some people believe businesses should behave in certain ways towards their stakeholders, and every enterprise must be conducted ethically

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What purposes do business activities have?

Business activities have 3 main purposes: to produce goods and services, to meet customer needs and to add value

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Producing goods and services

Making goods and services that satisfy the customers' wants and needs. The profit made by these goods are reinvested by the business, which leads to further wealth.

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Meeting customer needs

In order to meet customer needs, a business needs to develop a relationship with them. A positive relationship allows a business to learn from customers through feedback, and the business can use the feedback to improve products and services

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Adding valueHow is added value useful for a business?

Adding value is the increase in a products value as a result of a business producing that product. e.g. the difference between the final price of a car and the cost to make itA business that successfully adds value can operate profitably

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How can value be added to a product? (4)

Branding, Convenience, Quality and design, USPs

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Branding

Branding is the businesses way of presenting itself, including its logo, aims and values

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What can branding create?

Branding can create a lot of customer loyalty, which is important to businesses as it allows them to gain more of the market share

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Convenience

Convenience includes excellent customer service, having products that are easy to pay for and products that are available

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What does customer service do for a business?

Customer service that is good encourages customers to be brand loyal, rather than going to a competitor

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What can easy to pay for items do for a business?

Items that are easy to pay for mean that customers will continue to stay with your business because it is simple to make purchases

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What does being available mean for a business?

Being available can make people want to go to a particular shop because of the times they are open, and can attract the custom of people in the local area

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Quality

A business needs to be able to demonstrate its quality of its products and services in order to show customers they can depend on its brand

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Design

This may be the design of the product, marketing or website. These designs can communicate the business's values and encourage customers to buy from that business

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USPs

A USP is something that differentiates a product or service from its competitors.

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What are potential USPs?

PriceQualityBeing first to the market

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What does an entrepreneur have to do?

An entrepreneur has to have an idea for a new business, but also organise resources, make business decisions and take risks

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Organising resources

A key resource of a new business is finance. The entrepreneur has to raise enough money for the business in terms of all costs, as well as future costs. They also need to be able to lead and motivate people

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Making business decisions

To make good business decisions, an entrepreneur has to focus on their long-term vision of the business, but each short-term stage of its growth as well.

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Taking risk

Entrepreneurs will need to take financial risks, as well as key business decisions. However, an entrepreneur can minimise the risks by having a good knowledge of the market and market research

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Enterprise

entrepreneurial activity (can also mean business or company)

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Entrepreneur

someone who creates a business, taking on financial risks with the aim of making a profit for the business

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Consumer

someone who buys and uses goods and services

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Obsolete

out of data or not used anymore

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E-commerce

using the internet to carry out business transactions

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M-commerce

using mobile technologies, such as smartphones and tablets, to carry out business transactions

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Social media

websites that allow users to interact with other users, by sharing text-based messages, pictures or links to online content

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Payment platforms

enable businesses to take online payments from customers. They are usually free for the customer to use, but require a small amount of commission from the seller

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Marketplace

the activities involved in buying and selling particular types of goods or services, in competition with other companies

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Data

information, particularly statistics that can be collected and analysed

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Demographic

relating to the population, such as average age, income, and so on

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Risk

the possibility that an enterprise will have lower than anticipated costs or experience a loss

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Financial reward

the money that an entrepreneur or investor receives when a business succeeds

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Market research

the process of gathering information about the market and customers' needs and wants in order to help inform business decisions, including product design and marketing

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Revenue forecast

a prediction of future revenue based on expected sales; this is either a judgement or based on previous sales patterns

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Cash flow

the amount of money coming in and going out of the business and the timing if this movement